Ahead of the Curve

The lending environment is undergoing a worrying change. Funds that European direct lenders have raised but not yet deployed are at an all-time high and banks in most Western-European jurisdictions have renewed lending following years of reticence after the global financial crisis, leading to increased competition amongst lenders in the small and medium enterprise (SME) market.

Turner & Newall to cost Protection Fund £225m

UK- Turner & Newall, the failed UK engineering company, could cost the Pension Protection Fund £225m to help meet its promises to employees, according to independent consultant John Ralfe.

Ralfe, in a paper for RBC Capital Markets, an Canada-based banking group, said when the Fund starts on 6 April Turner & Newall could immediately cost it £225m, which would be met by levies charged against other defined benefit schemes.

The Fund was created by the government in response to public concerns that companies could collapse while their pension funds were in deficit and fail to meet their promises.

Turner & Newall, which is a subsidiary of a US group, failed to agree a deal with potential acquirers, such as bond raider Carl Icahn, last year and could collapse leaving £1.9bn in liabilities and a £775m deficit.

After selling company assets, Ralfe, who was formerly the pensions head at UK retailer Boots where he moved the fund wholly into bonds before the last stockmarket crash, told IPE that he estimated that the Fund would have to pick up the remainder of the deficit.